South Africa Extends Fuel Subsidy till August, Avoids Protest

The fuel subsidy in South Africa has been extended. To make this happen, South Africa’s finance minister, Enoch Godongwana wrote to the National Assembly’s speaker, urging that a two-month proposal for the prolongation of the general gasoline charge cut be tabled.

This will be accomplished by extending the R1.50 per litre respite for the first month, from June 1 to July 6, 2022.

Then, from July 7 to August 2, 2022, the relief will be adjusted downward to 75c per litre for the second month.

The interim reprieve will be lifted on August 3rd.

The R4.5 billion in income lost as a result of the relief extension is estimated.

The proposal, unlike the previous statement, is expected to have an impact on the fiscal framework because it will not be entirely funded through strategic oil stock sales.

The demand side management fee of 10c per litre that has been levied to inland 95 ULP will be removed on June 1st by the mineral resources department.

The basic fuel price will also be reduced by 3c per litre in the following months, according to the announcement. Over the longer term, a review will be conducted to analyse the retail, wholesale, distribution, and secondary storage margins.

South Africa’s main opposition party, the Democratic Alliance, had insisted on staging protest across the country because of the planned removal of fuel subsidy. It seems the ruling, African National Congress has avoided another potential social disruption.